BlackBerry's real estate sale to net CDN$305 million

BlackBerry has been working to sell their real estate holdings in Canada for a few months now, and today they've got a buyer. Today brought the announcement that Spear Street Capital has agreed to purchase BlackBerry's more than 3 million square feet of real estate and vacant lands for CDN$305 million (US$278 million).

Spear Street has waived their due diligence in the process to move things along, and expects that around 80% of the sales will be complete by the end of the month. The remainder might take a bit longer, with those sales not expected to be completed until the third quarter of the year. The sale includes space that BlackBerry currently uses, which they'll continue to occupy and lease from Spear Street.

A few hundred million dollars isn't a bad thing for BlackBerry to have on their books, and it comes at a time when BlackBerry could use every few hundred million dollars that they can get. They might be top tech dog in Canada today, but there's work for BlackBerry to do to continue their path forward. So every few hundred million counts.

Press release:

BlackBerry Announces Update on Sale of Canadian Real Estate Holdings

WATERLOO, ONTARIO--(Marketwired - May 05, 2014) - BlackBerry Limited (NASDAQ: BBRY)(TSX: BB), a world leader in mobile communications, today announced that Spear Street Capital, LLC has waived its due diligence condition pursuant to BlackBerry's previously-announced agreement to sell the majority of BlackBerry's real estate holdings in Canada. Spear Street has agreed to purchase the properties for CDN$305 million, or approximately US$278 million. The parties expect to complete the sale of properties valued at approximately 80% of this total later this month, with the sale of the remaining properties to be completed during the third calendar quarter of 2014, subject to customary closing conditions in each case.

Under the terms of the transaction, BlackBerry will sell more than 3 million square feet of space as well as vacant lands. BlackBerry will lease back a portion of the space as the Company continues to have a strong presence in Canada with Waterloo continuing as the home of its global headquarters.

I hear you. Well I guess at the end of the day, they gotta whatever it take to make back some money. I know they did the same thing here in Nova Scotia with their building...before letting pretty much all the staff go in December. Apparently there's a few staff still in the building every now and then but for the most part it's empty although a few floors are being taken over by IBM.

No no no...didnt you hear the guy who ran that webOS site is letting us know this is bad news......sorry, but he knows whats up, we should all listen to him....Get your logic, knowledge, and education out of here...Derrick has spoken!

Mr Kessler why is selling the real estate not a good sign ?? A real estate lease back is always a good strategy in a good Realty market to sell and is also a good corporate tax strategy going forward. Also interest rates have one way to go is up and can become a Dead Horse that Eats type of assets ...hmmm !! Plus Prem Watsa , Canso Financial and Brookfield Asset Management all owners of the convertible bond seem to know quite a bit about Real Estate strategy !! Nope I am all for a lease back and like the deal .

Its not a good sign because he has no idea what he is talking about (fact)......So you have to wonder why a bias bitter Palm guy is reporting finance/ business news on Crackberry, then trying to manipulate the communities opinion(that it must be bad news) upon the intake of the news in the comments, when he clearly has no background in the matter, and is pretty obvious completely ignorant to it.

1990 housing real estate mess in Canada and 2008 USA real estate mess , CMHC is a bloated balance sheet hitting $600B primarily was suppose to be used for insuring mortgages is now insuring questionable real estate assets also the Canada Housing Trust a division of CMHC has a bloated balance sheet and interest rates have one direction and that is up !! That's housing real estate 101 going forwarded ! Here we are talking about Commercial Real Estate a whole different financial engineering animal & strategy ! My tenant has been renting from me for 12 years , he gets to write off some of his rent , travels and has a time share and yes makes a good income. Rent or Own another topic for another day visit www.greaterfool.ca lots of action there on that topic !!

I think that is ridiculous, why would you rent if you could own? Leasing from a company you just sold to is not even a band aid solution. This smacks of the old guard and not what Chen would do. What gives BlackBerry?

I did read the beginning section written by CrackBerry (which didn't mention the land being leased back..btw..hence my question) but not the press release which I do normally because I find the summery that crackberry writes much easier to read. The press releases tend to be a bit wordy at times. So to answer your question..."not fully".

How so? Thus far they haven't really done anything aside from further cut costs and delay products? The Z3 was delayed from it's March/April launch window to May. So they haven't even ended that long standing BlackBerry tradition yet. But Prem Watsa has been invested in and on the board of BlackBerry for years.

Good use the money for product placement in "50 Shades of Gray" movie. Ill keep saying this because its an opportunity that would pay off huge! So much exposure and giving BlackBerry a cool factor they have lost.

Its a BlackBerry not a cigar. Lol. In all seriousness, the main character uses a BlackBerry and gives one to his girl and tells her to use the "blackberry". It will be interesting to see if its shown in the movie. Just a nice opportunity to use product placement similar to Fed Ex in the movie Cast Away. Audi actually is doing this for "50 Shades of Gray".

Speaking of product placement, I saw a weird one in an Armin van Buuren video last night ("This is what it feels like") where, in the video, he has a rivalry with his friend (and vocalist for the song) Trevor Guthrie...they both wind up pulling pranks on each other one of which was Trevor taking Armin's phone and using it to stir his coffee. Just found it to be a little weird that Mr. Van Buuren makes north of 50 million a year but his daily driver looked to be a BlackBerry Pearl! Even if it was just a prop for the video I mean, what, they couldn't go out a buy a Q10 to ruin? :-)

The buildings are a depreciation asset, they probably have already written the buildings off entirely depending on how long they have been holding them for, so no more taxable benefit to gain aside from maintenance cost write offs I guess, now they can claim the lease as an expense, in the end it works out better on paper I believe, plus they have more cash in the bank now.

Do you want money tied up in real estate that might carry a return similar to bank interest rates, or do you want to invest it in your real actual business, where you might have higher margins and get a much better return?

Ok, BBRY is still not profitable.
Let's say they could have a 10 to 20% margin, the money is better spent invested in their main business than running their own real estate shop or being a landlord to themselves.

Sounds good if they need the cash, hell i would do that too if it was required if I had that much land that wasn't being used. Or better yet, plant trees on it and beautify it, since more trees equals more oxygen.

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